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I. Conditions and Procedures for Bank Loans
1. Loan Conditions
- Vietnamese citizens aged 18 to 65 at the time of loan settlement, with guarantors not exceeding 70 years old at the contract signing.
- In cases where customers are elderly but in good mental and physical health, the bank may consider exceptions.
2. Documentation
Required documents for loan application: - Identification card - Household registration book - Marital status certificate/marriage certificate - Proof of income (employment contract, bank statements for at least 3 months, land use rights certificate, etc.)
II. Calculating Bank Loan Interest Rates
1. Determine the exact loan amount needed
For vehicle loans, banks typically offer a maximum financing of up to 80% of the total vehicle value.
For instance: You're looking to secure a bank loan to purchase a car valued at 807 million dong. Based on the contract value of the car purchase, the bank will support you with a loan of 80% x 807 million = 546.6 million dong. However, the bank won't consider the remainder but will round it down to 546 million dong.
2. Determining the loan term
According to calculations, if you borrow from a bank with a longer loan term, the monthly repayment to the bank will be less. Therefore, depending on your ability to repay the bank each month, you can extend or shorten the repayment period. Ideally, you should inform the bank of your income level, so bank staff can advise you on the best loan term.
For example, if you borrow from a bank to buy a car worth 807 million dong and your monthly income ranges around 20 million dong. Thus, you should borrow money for a period of approximately 80 months.
3. Identifying bank loan interest rate packages
Currently, banks offer various loan interest rate packages to meet the needs of all customers. You can contact the bank you're interested in for the best advice.
* Fixed interest rate
This type of interest rate maintains the same monthly interest rate throughout the loan term, meaning the interest rate for your borrowing period will not fluctuate. This helps you avoid pressure and risks associated with interest rate fluctuations.
For example: You borrow money from a bank to buy a car worth 807 million dong over 80 months with a loan amount of 546 million dong at a fixed interest rate of 12% per year. Therefore, the monthly interest you have to pay is 546 million x 12%/12 = 5,460,000 dong throughout the year.
* Floating interest rate (variable, fluctuating)
Compared to fixed interest rates, floating interest rates fluctuate and change depending on the bank's policies and regulations over time. Floating interest rates consist of capital costs + fixed interest rate margin or could be fixed capital costs + variable interest rate margin.
* Mixed interest rate
Mixed interest rate includes a fixed interest rate that will be applied for an agreed period by both parties, after which a floating interest rate will be applied.
For example: Let's assume 100 million is the loan amount, and the mixed interest rate is 10%. After 1 year, you'll have 100 million plus 10 million interest, totaling 110 million dong. In the second year, the 10% interest will apply to the principal amount of 100 million dong resulting in 10 million dong interest, with accumulated interest being 10 million dong, leading to 1 million dong in interest, totaling 11 million dong interest for that year, and 21 million dong for two years.
4. Calculating monthly and yearly bank loan interest rates
* Calculating interest on the initial principal balance
Calculating interest on the initial principal balance is a method of calculating interest based on the principal balance without any changes each month, meaning, even if the principal decreases, the interest rate remains fixed.
Loans such as personal unsecured loans, without collateralizing assets with the value of the loan being low. Large loans will not apply this calculation method.
Formula:
The amount you have to pay monthly = Principal balance * annual interest rate / loan term
For example: You borrow 16 million dong at an interest rate of 13% over 36 months.
- The amount of interest you have to pay the bank monthly: 16 million * 13%/36 = 57,778 dong
- The amount you have to pay monthly to the bank: 16 million/36 months = 444,444 dong
Therefore, for this loan, within the 36-month loan term, you need to pay 502,222 dong each month.
* Calculating interest on decreasing principal balance
This method of calculating interest on decreasing principal balance is used when the principal balance fluctuates, applied to consumer loans, production and business loans secured by assets. For the next month, the principal amount will be reduced by the previous months. The interest you need to pay will be calculated on the remaining principal, where the annual interest rate is divided by 12 months.
Formula:
Monthly principal = Loan amount / Number of months loaned
First-month interest = Loan amount * Monthly interest rate
Subsequent monthly interest = Remaining principal * Loan interest rate
For instance: You borrow 80 million dong over 12 months with a decreasing principal balance interest rate of 12% per year, disbursed on April 17, 2019.
Thus, you have to pay a total interest for the loan of 85,199,994 VND
Not only calculating bank loan interest rates but also bank savings interest rates are of interest to many people. Bank interest rates vary monthly, so you need to update and monitor them regularly to maximize the value of your deposits.
